Demand for home loans dips in February

Mortgages for owner-occupiers dropped during the month of February, according to new data from the Australian Bureau of Statistics.

ABS’s latest Housing Finance report found that 54,816 home loans (seasonally-adjusted) were issued for owner-occupiers in February 2017, slipping by 0.5 per cent on the preceding month in both number and value.

While the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments fell to 13.3 per cent in February 2017 from 13.4 per cent in January 2017 (in original terms), the actual number of first home buyer commitments rose by 7.5 per cent to 6,596 in February from 6,136 in January.

The number of non-first home buyer commitments also rose.

Mortgage Choice CEO John Flavell commented on the drop in home loan numbers, saying: “After three consecutive months of growth in home loan approval numbers, we saw a decrease in February.

“Of course, [this] result isn’t surprising. January and December are notoriously strong months in terms of home loan demand and we then tend to see a drop off in home loan approvals come February.”

However, Mr Flavell said that while home loan approvals had seen a marginal sequential fall in February, they could still be classed as strong in overall historical trend terms.

“Moreover, the total value of all home loans written was also strong by long-term standards,” he added, highlighting that in February 2017, total mortgages were valued at $32.9 billion (in seasonally-adjusted terms) up 0.3 per cent year-on-year.

Going forward, Mr Flavell warned that recent investment policy and pricing moves by several of Australia’s main lenders could potentially see this type of home loan demand spiral down.